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Exam 8: Accounting for Receivables

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Question 21

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During 2018, Alfred Inc. had sales on account of $198,000, cash sales of $81,000, and collections on account of $126,000. In addition, they collected $2,175 which had been written off as uncollectible in 2017. As a result of these transactions, the change in the accounts receivable balance indicates a

A) $69,825 increase.
B) $72,000 increase.
C) $150,825 increase.
D) $153,000 increase.

E) B) and C)
F) A) and C)

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Question 22

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Under the direct write-off method, no attempt is made to match bad debts expense to sales revenues in the same accounting period.

A) True
B) False

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Question 23

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A finance company or bank that purchases receivables from businesses is known as a ______________.

The allowance method of accounting for uncollectible accounts is required if

Using the percentage of receivables method for recording bad debt expense, estimated uncollectible accounts are $14,000. If the balance of the Allowance for Doubtful Accounts is $2,000 debit before adjustment, what is the amount of bad debt expense?

The maturity value of a $50,000, 9%, 60-day note receivable dated July 3 is

Deborah Company's account balances at December 31 for Accounts Receivable and Allowance for Doubtful Accounts were $2,100,000 and $50,000 (Cr.) , respectively. An aging of accounts receivable indicated that $180,000 are expected to become uncollectible. The amount of the adjusting entry for bad debts at December 31 is

Bad Debt Expense is considered

The cash realizable value is the difference between the

When the allowance method of accounting for uncollectible accounts is used, Bad Debt Expense is recorded

Banks that issue credit cards generally charge retailers a fee of 2 to 4% of the amount of sale. List reasons why companies are willing to pay these fees.

Magneto Company had net credit sales during the year of $1,350,000 and cost of goods sold of $810,000. The balance in accounts receivable at the beginning of the year was $180,000, and the end of the year it was $120,000. What was the accounts receivable turnover?

A cash discount is usually granted to all of the following except

Your roommate is uncertain about the advantages of a promissory note. Compare the advantages of a note receivable with those of an account receivable.

The financial statements of Gervais Manufacturing Company report net sales of $500,000 and accounts receivable of $80,000 and $40,000 at the beginning and end of the year, respectively. What is the accounts receivable turnover for Gervais?

The preferred method of accounting for uncollectible accounts is the:

When the allowance method is used to account for uncollectible accounts, the ______________ is credited when an account is determined to be uncollectible.

IFRS

When the allowance method is used to account for uncollectible accounts, Bad Debt Expense is debited when

In 2018, Boyle Company had credit sales of $900,000. On January 1, 2018, Allowance for Doubtful Accounts had a credit balance of $22,500. During 2018, $36,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance balance should be 10% of the accounts receivable become uncollectible. What should be the required adjustment to the Allowance for Doubtful Accounts at December 31, 2018 if the ending accounts receivable balance was $240,000?